The Number of U.S. Homebuyers Drops to a Record Low

Home sellers outnumber buyers in the U.S. by an increasing, record-setting margin.

According to Redfin, there were an estimated 51.3% more home sellers than buyers in the housing market in July. That’s just shy of December’s peak of 51.8% and up from 47.9% the month before.

“Buyers are dropping out faster than sellers, giving the buyers who remain more options and more negotiating power,” said Asad Khan, a Senior Economist at Redfin. “At the same time, uncertainty around whether the Fed will hike rates—and this summer’s rising mortgage rates—are keeping many would-be buyers on the sidelines. That makes the stretch between now and Labor Day a potential sweet spot for people who need to move: Buyers have leverage, while motivated sellers may be willing to negotiate before the early-fall rush brings some buyers back to the market. This could be the best chance for buyers and sellers to meet in the middle.”

Redfin noted that Miami, Nashville and several parts of Texas are the nation’s strongest buyer’s markets, where sellers outnumber buyers by the widest margins.

According to Redfin, when sellers outnumber buyers, the buyers usually have more negotiating power because they have options. That’s why a market with a lot more sellers than buyers is considered a buyer’s market.

Buyers Backing Off

But it’s only a buyer’s market for people who can afford to buy, Redfin said. High housing costs and widespread economic uncertainty have caused many would-be buyers to back off in recent years, Redfin noted, and that has created the imbalance of buyers and sellers seen today.

Redfin said that the number of homebuyers in the market fell to its lowest level on record in July. Nationwide, there were an estimated 966,752 buyers in the market, down 2.5% from the month before, the online brokerage said.

There were an estimated 1,462,921 home sellers in the market. That’s down 0.3% from a month earlier to the lowest level in a year, but there were still roughly half a million more sellers than buyers.

The seller surplus jumped from June to July because while fewer sellers entered the market, many fewer buyers entered the market, Redfin said.

The brokerage noted its isn’t a story of surging supply so much as sluggish demand; buyers who can’t stomach today’s prices and mortgage rates are simply waiting on the sidelines, pushing most of the country into buyer’s-market territory.

Demand Falls in July

Homebuying demand fell in July largely because mortgage rates soared to their highest level in a year, straining affordability. Widespread economic and geopolitical uncertainty also deterred house hunters. Some prospective sellers pulled back as they took note of slow demand.

More than three-quarters of U.S. housing markets—39 of the 49 U.S. metro areas Redfin analyzed—are buyer’s markets. Redfin said it analyzed the 50 most populous metros, and excluded Fort Lauderdale, Florida because of insufficient data.

Miami was the nation’s strongest buyer’s market in July, with an estimated 154% more sellers than buyers. Next came Nashville, Tennessee (151%), Houston (130%), San Antonio (116%) and Austin, Texas (112%).

Only six of the major U.S. metro areas Redfin analyzed were seller’s markets in July. The metros that are neither seller’s nor buyer’s markets are considered “balanced” markets.

Nassau County, NY was the strongest seller’s market, with 36% fewer sellers than buyers. The other seller’s markets were Newark, New Jersey (-21%), Providence, Rhode Island (-17%), Milwaukee (-15%), New Brunswick, New Jersey (-13%) and Montgomery County, Pennsylvania (-13%).

Redfin noted that the seller’s markets are mainly in places where construction of new homes has been constrained for years.